BULLETIN
#29 Winter 2000

l MODERN EMINENT DOMAIN
l TAFOL FILES AMICUS CURIAE BRIEF IN GONZALEZ CASE
l PROPERTY RIGHTS LOSE IN THE TRIAL COURT--- AGAIN!
l FREE SPEECH

#29 Winter 2000 Page 1

MODERN EMINENT DOMAIN
By Larry Salzman

This article was written for The Ayn Rand Institute's op-ed program. It appeared in numerous papers, including The Sacramento Bee and The Las Vegas Review-Journal.

Amid cheers of a majority of voters, the sanction of its mayor and city council, and the financial backing of leading local businessmen, the city of San Diego is perpetrating a terrible injustice. The victims are a small group of innocent individuals facing the likelihood of being stripped of their homes and businesses.

This violation is being enacted for the alleged "public use" of developing a downtown ballpark. Recently, the San Diego City Council voted to move ahead with the project and officials are now ordering people from their homes. The land taken by the city will go to some of San Diego's most politically connected, who will build the ballpark and a 26-block "entertainment center" where the residents' homes and livelihoods now stand.

San Diego joins a growing trend among U.S. cities using the power of eminent domain---the government's ability to lawfully seize property---to tyrannize politically weak individuals. In a recent well-publicized case, for instance, Donald Trump conspired with Atlantic City officials to level a block of family businesses so that he would have more room next to his casino for a parking lot. Just as the ballpark developers did in San Diego, Trump turned to unscrupulous city officials to gain by force what he could not get by private negotiation. Fortunately, these victims were aided by the charity of aggressive lawyers who blocked Trump's gambit.

Although always a violation of property rights, traditionally the eminent domain power was limited to and employed for strictly public purposes such as roads, utilities, and military use. Courts did not allow government to take, for example, a corner mom-and -pop gas station solely to turn it over to McDonalds for redevelopment. In 1983, when the state of Hawaii took vast tracts of land from a small minority of private owners and resold it to the "general public," the U.S. Court of Appeals declared it "a naked attempt" to take private property and correctly identified it as "majoritarian tyranny." Unfortunately, in 1984, the Supreme
Court disagreed.

Ever since, emboldened mayors and city councilmen have seized property in greater quantity for increasingly specious purposes. In Texas, the homes of 117 residents were bulldozed to make room for a shopping mall. In Detroit, hundreds of residents and businesspeople lost their homes and businesses so

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that GM could build a new plant. And elsewhere in San Diego an auto repair shop, hardware store, and carpet business were recently forced to close so that a Price Club could claim their land.

Compounding the injustice, many victims are financially ruined. Although the cities are charged under the Constitution with providing "just compensation" to eminent domain victims, they are not required to offer fair-market value but a bureaucratically determined "fair and reasonable" one. Knowing that they will rarely be second-guessed by the court's new pacifist approach, the cities often make callous, shamefully low offers---sometimes less than 10 percent of appraised value, and the victims' lawyers, where the victims can afford lawyers, can only counsel their clients to take whatever they can get.

What prevents overwhelming public outrage at such injustices? A broad acceptance of the morality of altruism--the view that an individual's moral worth derives solely from service to others. Its corollary, applicable in this case, is that any individual sacrifice or injustice wreaked by the city is inconsequential in comparison to the alleged benefit of a "public use."

Ayn Rand was right when she observed, "since there is no such entity as 'the public,' since the public is merely a number of individuals, the idea that 'the public interest', supersedes private interests and rights can have but one meaning---that the interests and rights of some individuals take precedence over the interests and rights of others."

This is exactly what is happening in San Diego and other American cities. The local government is forcing a politically weak minority of citizens to sacrifice its rights to a well-connected few, in the alleged favor of the majority.

This use of eminent domain flatly contradicts the fundamental principles of this country, which declare that all men are created equal, that every man is an end in himself endowed with inalienable rights, including property rights, that each man be accorded equal protection by the law and that no man be deprived of due process under the law.

We must choose one set of principles or the other---the American tradition, or arbitrary rule by official whim. They cannot coexist. The present use of eminent domain is a menace that must be challenged at every step and, for the sake of all our freedom, should be repealed entirely. It may be too late for too many beleaguered San Diegans, but your property could be next.

TAFOL FILES AMICUS CURIAE BRIEF IN GONZALEZ CASE

As you know from the news, relatives of Elian Gonzalez, the six-year-old Cuban boy whose mother and stepfather lost their lives fleeing communism, filed a lawsuit to prevent the INS from returning him to Cuba. The government was supported by two amicus curiae briefs each of which ignored the kind of society that exists on Cuba. They took the (implicit) position that a communist system presented no threat to a six-year-old boy. In the words of one of them: "The Cuban people eagerly await Elian's return and every indication is that Elian will receive only the warmest of welcomes when he returns home."

TAFOL filed an amicus curiae brief, written by Amy Peikoff with editing from Steve Plafker, in support of the relatives. This brief took the opposite view of the way a governmental system

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affects human life:

     The choice of what political system to live under is not a matter of "subjective bias"
     or "international politics." It is not a decision "inappropriately laden with subjective
     and culturally-based value judgments." The commitment to liberty is not an
     "encumbrance" which renders one incapable of acting as proxy "for the effective
     real parties in interest." Rather, it is a decision that follows logically upon a proper
     recognition of the rights and interests at stake.

     Those who say that political opinion is irrelevant to this case are trying to further
     their own political opinion: that a free country like the United States provides
     no better way of life for human beings than does a totalitarian dictatorship.

Good and bad news alternate in the Elian Gonzalez case. The district court ruled for the government; the case is now in the Court of Appeals. Ms. Reno is trying to get Elian back to Cuba before the Courts can decide the case. The Court of Appeals issued a temporary restraining order against her. See the newspapers for the latest information.

PROPERTY RIGHTS LOSE IN THE TRIAL COURT---AGAIN!

For several years, TAFOL has been supporting its former president, Michael Mazzone, in his fight against Texas IOLTA. This program requires that lawyers place certain of their clients' funds in interest-bearing bank accounts and turn the interest over to a state agency for use in providing legal services to low-income persons. Michael, one of his clients, and the Washington Legal Foundation sued the State of Texas in a federal district court seeking to have IOLTA declared unconstitutional. They asserted two bases: that it violated property rights under the Fifth Amendment¹ and that it violated rights to free speech under the First. The basis of the second claim was that the State, through the program, was using clients' money to fund positions to which they were opposed.

The District Court denied both claims. On the Fifth Amendment claim, it ruled that the clients had no "property interest" in the interest generated by their deposits. It found that the First Amendment claim was premised on the property right claim.

The Court of Appeals reversed this ruling. Texas appealed to the United States Supreme Court which affirmed the Court of Appeals.² It declared that the interest in question was protected by the Fifth Amendment but did not actually decide that the program was unconstitutional. Instead, it sent the case back to the trial court to answer two questions: Was the interest being taken by the IOLTA program and, if so, what was the amount of "just compensations"? Because of the nature of this ruling, the Texas program continues to operate.

A trial was held in September, 1999 before the same judge who had made the original decision. Plaintiffs produced evidence showing that, by the use of a modern computer program, most clients can earn interest or otherwise benefit from their principal on deposit, no matter how small the amounts. Michael's client testified he disagreed with certain statements made with use of the interest generated by his money.

The Defendants called five witnesses: A local lawyer who testified that it would be difficult to earn interest for his clients on the funds entrusted to him, a former Texas Supreme Court chief

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justice who testified about the reasons why Texas adopted IOLTA originally, the dean of the Texas Tech Law School and former head of IOLTA who testified about the legal needs of the poor, the general counsel of a the Texas Independent Bankers Association who testified about federal restrictions on interest bearing checking accounts, and a lawyer from Colorado who has been active in IOLTA activities for the American Bar Association.

This past January, the judge ruled in favor of the Defendants.³ On the Fifth Amendment claim, the court concluded that, without the IOLTA program, clients' principal could generate no interest; therefore, the State took nothing. On the First Amendment claim, the Court concluded that Michael's client had failed to establish any connection between him and any views with which he disagreed; the Court also concluded that the IOLTA program is germane to an "otherwise lawful regulatory program and supports a substantial public interest" and therefore the clients' compelled financial support was not improper.

Soon after receipt of the court's ruling, the plaintiffs appealed. The Court of Appeals is awaiting receipt of the record. As soon as the record arrives, a brief schedule will be set, and the case will proceed. TAFOL will probably file another amicus curiae brief.

This case was originally filed on February 7, 1994. After numerous proceedings in the trial court, the Court of Appeals, and the Supreme Court, the latter issued its opinion on June 15, 1998. The case still appears far from a complete resolution. The wheels of justice grind slowly and, in the absence of a proper philosophy, sometimes in reverse.
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Note and References:

1.The portion of the Fifth Amendment relevant to the case reads: "nor shall private property be taken for public use without just compensation."

2. The citation for the trial court opinion is 873 F. Supp. 1 (WD Tex. 1995), for the Court of Appeals. 97 F. 3d 996 (5th Cir. 1996), and for the Supreme Court 524 U.S. 156 (1998).

3. 86 F. Supp. 2d 617

FREE SPEECH
By James McCrory

In another erosion of the First Amendment, the United States Supreme Court held, in Nixon v. Shrink Missouri Government PAC,¹ a 6 to 3 decision, that campaign contribution limits were constitutional.

Under the Missouri statute at issue, no person may contribute more than $1,075² to any candidate for state auditor and certain other statewide offices. Shrink Missouri Government PAC wanted to make a larger contribution to Zev David Freedman, a candidate for the 1998 Republican nomination for auditor. In order that it be able to do so, the PAC and Freedman brought suit in a

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Federal District Court to enjoin enforcement of the statute. The District Court ruled against them but was reversed by the Court of Appeal. The Supreme Court reinstated the District Court decision.

The leading case on the subject is Buckley v. Valeo³ decided in 1976. In Buckley, the court found spending limits unconstitutional but upheld contribution limits of $1000 per election. The justification for the limitation was "the prevention of corruption and the appearance of corruption." It "drew a line between expenditures and contributions, treating expenditure restrictions as direct restraints on speech which nonetheless suffered little direct effect from contribution limits."⁴

The PAC and Freedman unsuccessfully argued that Missouri should be required to prove the existence of corruption in the electoral process there. Under current constitutional interpretation, "[A] state statute is not void, however, for want of evidence."

Justice Thomas, joined by Justice Scalia, wrote a passionate dissenting opinion. Justice Thomas would overrule Buckley v. Valeo. He noted the Court ignores the way speech of all kinds is disseminated. Justice Kennedy also dissented but was open to other new legislation as possibly constitutional.⁵

To the majority, the pragmatic goal of "avoiding the appearance of corruption" is more important than the First Amendment. One wonders if the limit of this line of non-thinking is that only individuals speaking on soap boxes ultimately have protected speech.

But pragmatism does not "work" to protect our form of government; what does work is the application of the principles of, and adherence to, liberty. And tyranny cannot be limited to one set of rights. Thus, the worst comment was in Justice Stevens' concurring opinion: "Money is property, it is not speech."

The entire Court is far from understanding the cause of corruption here. As long as the government has favors to distribute, men will try to get them. In the absence of rational criteria to determine who benefits, influence will be used.⁶ And of course, no such rational criteria are possible. The solution, therefore, is to restrict government to its proper role: the protection of rights.⁷ In a properly limited government, dishonest men could not purchase favors from government, and honest men would not need to pay bribes to prevent improper government interference.
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Notes and References:

1. No.98-963, <http://supct.law.cornell.edu/supct/html/98-963.ZS.html>, decided on January 24, 2000.

2. This was the limitation in 1995. The statute has a clause that allows the maximum allowable amount to increase with inflation.

3. 424 U.S. 1(1976)

4. Unless otherwise stated, all quotations come from the Shrink case. All citations are omitted.

5. In a follow-up case last month, a district court in Missouri held restrictions on the amount a political party may contribute to candidates unconstitutional. Predictably, the Republicans hailed the decision as a victory for free speech, and the Democratic attorney general criticized it as a "dramatic step backwards." See [sorry link no longer works].

6. "The Pull Peddlers" in Ayn Rand, The Voice of Reason, Essays in Objectivist Thought.

7. "The Nature of Government" in The Virtue of Selfishness by Ayn Rand; The Declaration of Independence.
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Copyright © 2000 The Association for Objective Law. All rights reserved. The Association for Objective Law is a Missouri non-profit corporation whose purpose is to advance Objectivism, the philosophy of Ayn Rand, as the basis of a proper legal system.